Chapter

CZECH REPUBLIC

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2004
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(Position as of January 31, 2004)
Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: October 1, 1995.
Exchange Arrangement
CurrencyThe currency of the Czech Republic is the Czech koruna.
Exchange rate structureUnitary.
Classification
Managed floating with no preannounced path for the exchange rateThe external value of the koruna is determined by supply and demand in the foreign exchange market. The Czech National Bank (CNB) may intervene in the foreign exchange market in order to smooth large intraday volatility swings of the euro-koruna rate. Effective January 2, 2004, the CNB publishes daily rates of 29 selected currencies against the koruna for customs and accounting purposes (previously, daily rates were announced for 16 currencies). Commercial banks set their own exchange rate with no limitation.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketYes.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Payments arrangementsNo.
Administration of controlThe MOF and the CNB are responsible for the administration of exchange controls and regulations, in accordance with the Foreign Exchange Act. In general, the MOF exercises authority over ministries and other administrative authorities, municipal authorities, budgetary organizations, state funds, and all types of credits being extended to or accepted by the Czech Republic. The CNB exercises authority over the activities of all other agents.
International security restrictions
In accordance with UN sanctionsThere are blocked accounts in connection with embargoes against the Islamic State of Afghanistan and the former Federal Republic of Yugoslavia.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotesThere are reporting requirements on exports and imports exceeding CZK 350,000.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency held abroadYes.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Blocked accountsThere are blocked accounts in connection with embargoes against the Islamic State of Afghanistan and the former Federal Republic of Yugoslavia.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measures
Negative listYes.
Open general licensesAutomatic import licenses are required for some agricultural and food products, tobacco and tobacco products, raw materials, fuels and mineral oils, chemical products and products of similar industries, used textile products, toxic substances, auxiliary chemical substances, certain seeds and plants, pharmaceutical products, certain steel products, and waste. For some armaments, a security license is required.
Licenses with quotasNonautomatic import licenses are required for sugar from the Slovak Republic and black coal from Ukraine and Poland.
Import taxes and/or tariffsAll imports are subject to an ad valorem customs duty of up to 29.4% for industrial goods and up to 125% for agricultural goods. Imports are also subject to a value-added tax of 5% or 22%. Under a customs union agreement, imports from the Slovak Republic are exempt from customs duties. Imports from developing countries are granted preferences.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licenses
Without quotasAutomatic export licenses are required for some raw materials; raw leathers; wood and wooden products; precious and common metals; iron and steel products (when exported to the EU and the United States); toxic substances; auxiliary chemical substances and precursors; pharmaceutical products; and waste. For some armaments, a security license is required.
With quotasNonautomatic export licenses are required for textile goods exported to Canada and the United States.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital transactionsYes.
Controls on capital and money market instruments
On capital market securities
Shares or other securities of a participating nature
Purchase locally by nonresidentsNonresidents’ foreign participation in the air transport sector may not exceed 49% of total participation.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsNo.
Controls on direct investment
Inward direct investmentThere are controls on investment by nonresidents in the air transport sector. In order to register an aircraft, obtain a license to operate an air transportation enterprise as a Czech company, or obtain a Czech air-operating certificate, the entity must be a natural or a juridical person domiciled in the Czech Republic; Czech residents must hold at least 51 % of the capital and voting rights; and Czech residents must have an effective influence on the management and full control of the activities of the enterprise. To carry out air taxi transport services, it is necessary only to be a resident of the Czech Republic.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase locally by nonresidentsA nonresident who is not a citizen of the Czech Republic may acquire real estate only in the following cases: (1) by inheritance; (2) for the diplomatic representation of a foreign country under the terms of reciprocity; (3) through unapportioned co-ownership of a married couple of which only one is a nonresident, or where a nonresident acquires property from a husband, wife, parents, or grandparents; (4) through the exchange of domestic real estate owned by the nonresident for other domestic real estate, the normal price of which does not exceed the normal price of the former real estate; (5) if the nonresident has a preemption by reason of a proportioned co-ownership of real estate; (6) if it is a construction built by a nonresident on his own land; and (7) under the terms explicitly stipulated by several acts on restitution and privatization. Nonresident legal entities that have an enterprise or branch and are authorized to conduct business in the Czech Republic may acquire the ownership rights to real estate, except in the agricultural and forestry sectors.
Controls on personal capital transactionsNo.
Provisions specific to commercial banks and other credit institutions
Open foreign exchange position limitsOpen foreign exchange limits are applied on both on- and off-balance sheet exposures; they are 20% of the capital for all currencies and 15% for open koruna positions.
Provisions specific to institutional investorsCredit unions, insurance companies, and pension funds may place their assets abroad, subject to specific prudential regulations.
Other controls imposed by securities lawsNo.
Changes During 2003
No significant changes occurred in the exchange and trade system.
Changes During 2004
Exchange arrangementJanuary 2. The number of currencies for which the CNB publishes daily rates was increased to 29 from 16.

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